CBX Weekly Newsletter // 17 June 2020
- Bitcoin with Demand Below $9K
- CME Bitcoin Options Market Grew 10x in the Past Month
- Inactive Bitcoin Supply Reaches 4-Year High, Pointing to Bullish Sentiment
Bitcoin with Demand Below $9K
Bitcoin is still moving around the $9K region. Prices last week did not continue further into the triangle, but instead broke downwards towards the end of the week (red triangle). As noted in last week’s analysis, prices did indeed experience a sell off to the $9100 level, before being pushed further, below $9000 4 days later.
We do see a strong pushback up as indicated by the long lower wick, so there seems to be demand below $9000. This may be attributed to institutional demand, and may be good news to bullish players.
Sentiments are slightly mixed at the moment, with markets also being susceptible to news by the US Federal Reserve. If prices maintain on the upward trend indicated by the purple line, we may well see prices push past $10k.
Bullish Scenario:
The Bollinger band is tightening and a sharp movement may be near. If there is a push upwards, and prices close above the EMA, players with a higher risk appetite will enter long, around $9500 ahead of the push.
Bearish Scenario:
Sizeable likelihood that prices can break downward as well. Short entry will be based on the purple trend line. The purple zone marks the 5% false-breakout zone before entering short. Once prices hit the yellow zone, short entry can be made, TP outside of the yellow zone, as there is support at the $7700 level.
CME Bitcoin Options Market Grew 10x in the Past Month
In the last 30 days, the total open interest for CME bitcoin options increased over 1,000%, from $35 million on May 11 to $373 million on June 10. Moreover, open interest made a new all-time high on six consecutive days from June 5–10.
CME launched its bitcoin options product only at the beginning of 2020 and now represents over 20% of the global bitcoin options market measured by open interest. Significant growth in CME futures points to rapidly growing interest by institutional investors in trading regulated bitcoin derivatives products.
Options aren’t the only bitcoin derivatives market where CME is seeing gains. In May, CME’s bitcoin futures demonstrated a remarkable growth, beating most of the other bitcoin derivatives platforms on a real and percentage growth basis.
Inactive Bitcoin Supply Reaches 4-Year High, Suggests Bullish Sentiment
On-chain data indicates crypto investors aren’t taking profits but are holding on despite uncertain economic conditions and bitcoin’s strong performance. According to Glassnode and Coindesk Research.
At the time of publication, 60.63% of all bitcoins have not moved in at least a year. This data suggests bitcoin ownership is consolidating, and investors who bought at the cycle bottom in 2018 have been reluctant to take profits.
Each wave — one day, one month, six months, two years, five years, etc. — represents the period of time in which a percentage of the issued supply has not been used in a transaction, or, in other words, has been inactive.
The term “HODL” represents the behaviour of die-hard bitcoin investors who chose to hold bitcoins with practically no intention of using or selling those coins. Thus, each wave visualizes what percentage of the bitcoin supply has been “HODLed” and for how long.
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